Cryptococcus neoformans is a neurotropic pathogen that causes fatal meningoencephalitis primarily in individuals with T-cell deficiency such as the AIDS patients. However, the fungus also cause infection in otherwise normal patients at a low frequency. The disease is 100% fatal unless treated and even with the most effective antimycotic agents, the fatality rate is about 25%. C. neoformans is an environmental yeast commonly found in the human environment world-wide. The yeast cells are encapsulated with a polysaccharide which mainly consists of glucuronoxylomannan. The polysaccharide capsule has been determined to be the major virulence factor of C. neoformans which allows the yeast to resist host defenses and produce cystic lesions. During the previous four years,we studied the mechanism by which Cap+ and Cap- strains of C. neoformans crossed the blood-brain-barrier (BBB)by using human brain microvascular endothelial cells (HBMEC) as the in vitro model of the human BBB.Our observations suggested that C. neoformans cells entered the brain by transcellular crossing of the endothelial BBB regardless of the capsular phenotype and that meningitis occurred after encephalitis. We also studied the role of phospholipase B of C. neoformans in the formation of cystic lesions in the brain. It was previously believed that cystic cryptococcal lesions in the brain were due to the accumulation of polysaccharide capsule. By using PLB1 deletant and wild type strains, we showed that the PLB1 deletant strain did not form cystic lesions while the wild type produced large cysts. Immunofluorescence microscopy indicated that capsules were present in both the wild type and the PLB1 deleted strains. The PLB1 mutant reconstituted with the wild type PLB1 gene produced cystic lesions. This indicated that phospholipase damages the brain tissue to form cystic lesions. In the past two years we constructed an insertional mutant library to identify the genes necessary for C. neformans to establish and cause fulminating disease in the brain where the oxygen level is considerably lower than the environmental habitat where the fungus optimally grows. We screened 30,000 insertional mutant clones for their ability to grow at hypoxia chamber with 1% oxygen and 5% carbon dioxide. Simultaneously, all 30000 clones were screened for their ability to grow in the presence of cobalt chloride which has been used as a hypoxia mimicking agent in mammalian systems. We have identified numerous genes that are associated with the ability of the fungus to grow in low oxygen conditions. During 2006-2007, we focused on the characterization of one set of genes encoding the sterol regulatory binding proteins, SRE1 and SCP1. The clones that had a mutation in these genes were unable to grow under hypoxia in vitro and were sensitive to cobalt chloride, a chemical hypoxia mimetic. These genes were found to regulate ergosterol synthesis and concomitantly function in the oxygen sensing pathway. Mice infected with the sre1 mutant failed to produce fatal disease while the mice infected with the wild type and the reconstituted strains died within two weeks. Histopathology of the brain from mice infected with the sre1 mutant showed restricted growth of yeast cells in the meninges and cortex areas of the brain while those infected with the wild type and the reconstituted strains showed homogeneous growth of yeast cells brain-wide. Characterization of the sre1 mutant showed that sre1 mutants are unable to synthesize ergosterol under a low oxygen environment. Transcriptome analysis of the wild type and the sre1 mutant clearly showed that while genes in the sterol pathway are highly upregulated in the wild type and the reconstituted strains under low oxygen conditions,the same genes in the sre1 mutant were not expressed under hypoxia. These results indicated that the sre1 gene functions in oxygen sensing indirectly when sterol is depleted.